EXHIBIT 10.6
AMENDMENT NO. 1
TO
SECURITIES PURCHASE AGREEMENT
THIS AMENDMENT is entered into as of this 22nd day of
October, 1998, by and among CHILDREN'S BROADCASTING CORPORATION, a Minnesota
corporation (the "Company"), TALISMAN CAPITAL OPPORTUNITY FUND LTD.
("Talisman"), DOMINION CAPITAL LIMITED ("Dominion") and SOVEREIGN PARTNERS L.P.
("Sovereign") (Talisman, Dominion and Sovereign are collectively referred to
herein as the "Buyers").
RECITALS:
WHEREAS, the Company and the Buyers entered into a Securities Purchase
Agreement, dated June 25, 1998 (the "Agreement"), pursuant to which the Buyers
acquired an aggregate of 606,061 shares of Series B Convertible Preferred Stock
of the Company (the "Preferred Shares");
WHEREAS, the Company provided notice to the Buyers on September 22,
1998 of the Company's intent to redeem all of the Preferred Shares pursuant to
the Agreement on October 22, 1998;
WHEREAS, the Company is unable to redeem all of the Preferred Shares as
of October 22, 1998; and
WHEREAS, the Company seeks alter the conversion schedule of the
Preferred Shares to extend its absolute right to redeem the Preferred Shares and
the Buyers have agreed to such modification on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Notwithstanding the terms of the Certificate of Designation of
Preferences and Rights of Series B Preferred Stock of
Children's Broadcasting Corporation (the "Certificate of
Designation"), the first paragraph of Section (D)(c)(1) of the
Certificate of Designation and the conversion schedule
immediately following such paragraph shall be restated in
their entirety as follows:
At the option of the holders thereof at any time after the
date 221 days following the Initial Closing Date, the shares
of this Series shall, subject to subparagraph (c)(1), be
convertible, into fully paid and nonassessable shares
(calculated as to each conversion to the nearest 1/100th of a
share) of Common Stock of the Corporation, at the conversion
price determined as hereinafter provided, in effect at the
time of
conversion, each share of this Series being deemed to have the
Stated Value for the purpose of such conversion. The number of
shares of Common Stock to be delivered upon conversion of a
share of this Series shall be the Stated Value, divided by the
lesser of (x) One Hundred Ten (110%) of the average best bid
price of the Common Stock for the five (5) consecutive trading
days ending on the day preceding the Conversion Date (the
"Fixed Strike Price"), or (y) Ninety-Four Percent (94%) of the
average of the three lowest closing prices of the Common Stock
during the 60 calendar day period ending on the day preceding
the Conversion Date (herein called the "conversion price"),
provided however, that such initial conversion price shall be
subject to adjustment from time to time in certain instances
as hereinafter provided. The number of shares so issuable upon
conversion shall be multiplied by the number of shares of this
Series to be converted, and the product thereof shall be
delivered to the holder. If any of the Preferred Stock remains
outstanding as of February 1, 1999 then the percentage
specified in clause (y) above shall be Eighty Percent (80%)
effective February 1, 1999 and such percentage shall be
Seventy Five Percent (75%) effective May 1, 1999.
(1) The Preferred Stock may be converted, at the option
of the holder, in accordance with the following
schedule:
Number of Days Percentage of Original
Elapsed Following Issuance Preferred Stock Convertible
-------------------------- ---------------------------
221 (Feb. 1, 1999) 80%
251 (March 1, 1999) 100%
2. The Buyers agree that the Company may file a certificate of
designation and perform other acts which may be necessary or
advisable to reflect the agreement of the parties expressed in
paragraph 1 above.
3. Concurrent with the execution of this Amendment, the
Company agrees to issue to the Buyers stock purchase warrants
entitling the Buyers to purchase an aggregate of up to 65,000
shares of Common Stock (the "Additional Warrant"). The
Additional Warrant shall bear an exercise price per share of
Common Stock equal to the lesser of (i) 100% of the average
closing price of a share of Common Stock for the five (5)
consecutive trading days ending on the day preceding the
Closing Date, or (ii) 80.77% of the closing price of a share
of Common Stock on September 30, 1998. The Additional Warrant
shall be exercisable immediately upon issuance, and for a
period of five (5) years thereafter. Upon issuance of the
Additional Warrant, the Additional Warrant Shares shall be
entitled to registration rights substantially in the form of
the Registration Rights Agreement.
4. If the Company has not redeemed 100% of the outstanding
Preferred Shares on or prior to December 31, 1998, the Company
agrees to issue to the Buyers stock purchase warrants
entitling the Buyers to purchase an aggregate of up to 35,000
shares of Common Stock (the "Second Additional Warrant"). The
Second Additional Warrant, if issued, shall bear an exercise
price per share of Common Stock equal to the lesser of (i)
100% of the average closing price of a share of Common Stock
for the five (5) consecutive trading days ending on the day
preceding the Closing Date, or (ii) 80.77% of the closing
price of a share of Common Stock on September 30, 1998. The
Additional Second Warrant shall be exercisable immediately
upon issuance, and for a period of five (5) years thereafter.
Upon issuance of the Additional Second Warrant, the Additional
Warrant Shares shall be entitled to registration rights
substantially in the form of the Registration Rights
Agreement. .
5. If the Company has not redeemed 100% of the outstanding
Preferred Shares on or prior to January 31, 1999, the Company
agrees to issue to the Buyers stock purchase warrants
entitling the Buyers to purchase an aggregate of up to 25,000
shares of Common Stock (the "Third Additional Warrant"). The
Third Additional Warrant, if issued, shall bear an exercise
price per share of Common Stock equal to the lesser of (i)
100% of the average closing price of a share of Common Stock
for the five (5) consecutive trading days ending on the day
preceding the Closing Date, or (ii) 80.77% of the closing
price of a share of Common Stock on September 30, 1998. The
Additional Third Warrant shall be exercisable immediately upon
issuance, and for a period of five (5) years thereafter. Upon
issuance of the Additional Third Warrant, the Additional
Warrant Shares shall be entitled to registration rights
substantially in the form of the Registration Rights
Agreement. .
6. Except as otherwise modified or amended herein, the parties
hereto ratify and affirm the terms of the Agreement and the
Certificate of Designation.
IN WITNESS WHEREOF, this Amendment has been duly executed by the
parties hereto as of the date first above written.
CHILDREN'S BROADCASTING CORPORATION
By /s/ Xxxxx X. Xxxxxxxxxx
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Xxxxx X. Xxxxxxxxxx
Chief Operating Officer
TALISMAN CAPITAL OPPORTUNITY FUND LTD.
By /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
Vice President
DOMINION CAPITAL LIMITED
By /s/ Xxxxx X. Xxxxx/Xxxxx X. X'Xxxxxxx
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SOVEREIGN PARTNERS LP
By /s/ Xxxxxxx Xxxxx
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